Journal of Applied Finance & Banking

Merger and Acquisitions of IPO firms in Taiwan

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• Abstract

  There have been great efforts in the finance literature to enhance the understanding of companies experiencing substantial growth. IPO and mergers and acquisitions (M&As) are very important restructure options for firms as they grow with complexity arises from internally and externally. Solution-driven strategies should be desirable for firms go public, especially in emerging economics regime, such as Taiwan. In this study, we examine the key predictions, short-run and long-term performance of merger and acquisition activities of Taiwan IPO firms. Implications on investigating the effects of the long-term performance for newly listed firms that become subsequent bidder draw attention for investors seeking global investment strategy. The results show that the performance of IPO acquirers is significantly different from IPO non-acquirers measured in abnormal returns and cumulative abnormal returns. Moreover, from the cross-sectional regression analysis, IPO acquirers outperform non-acquires. After controlling for the effect of different deal and firm characteristics, the multiple regression results confirm the significant negative size effect, leaving age, proceeds, market to book ratio insignificant. Overall, our results regarding the takeover activity of IPOs helps explain IPO underperformance.